{"id":828852,"date":"2025-06-20T13:29:13","date_gmt":"2025-06-20T11:29:13","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=828852"},"modified":"2025-06-20T13:29:33","modified_gmt":"2025-06-20T11:29:33","slug":"reserve-banks-warning-for-south-african-banks","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/finance\/828852\/reserve-banks-warning-for-south-african-banks\/","title":{"rendered":"Reserve Bank’s warning for South African banks"},"content":{"rendered":"\n

Growing geopolitical upheaval and global policy uncertainty are among the biggest risks facing South Africa\u2019s financial industry, the South African Reserve Bank says.<\/p>\n\n\n\n

The nation is vulnerable to spillover effects from trade-related tensions and international conflicts because of the limited extent to which it can mitigate against them, the SARB said in its biannual Financial Stability Review on Thursday.\u00a0<\/p>\n\n\n\n

\u201cGlobally, we are witnessing a significant disruption of the international trade system,\u201d Governor Lesetja Kganyago said in a briefing in Johannesburg. <\/p>\n\n\n\n

\u201cWe are also seeing intensifying global conflicts, with the war in Ukraine ongoing and conflict escalating in the Middle East.\u201d \u00a0<\/p>\n\n\n\n

The US this year imposed tariffs on everything from steel to autos. <\/p>\n\n\n\n

Meanwhile, Israel launched a surprise attack on Iran\u00a0last week<\/a>\u00a0and the Islamic Republic retaliated with waves of ballistic missiles and drones, raising fears of a wider regional conflict and disruptions to flows of oil and consumer goods.<\/p>\n\n\n\n

The uncertainty caused by these events has led central banks to refrain from cutting interest rates, while investors have shifted away from riskier financial assets. <\/p>\n\n\n\n

In the first five months of this year, foreign investors sold R111 billion of South African equities, while their share of government bonds declined to 24.5% from 24.6% between December and May.\u00a0<\/p>\n\n\n\n

Heightened market turmoil may lead to rapid capital outflows<\/strong>, the central bank warned. <\/p>\n\n\n\n

A material selloff in rand-denominated government bonds may raise state borrowing costs and undermine fiscal sustainability, it said.\u00a0<\/p>\n\n\n\n

South Africa\u2019s debt-to-gross domestic product ratio is forecast to peak at 77.4%<\/a> in the year through March and it spends 22 cents of every rand collected in revenue on servicing its loans. <\/p>\n\n\n\n

So far, South Africa\u2019s financial system is demonstrating \u201ca high degree of resilience\u201d in response to the global shocks, Kganyago said. \u201cThe one thing that is certain is that uncertainty is here.\u201d\u00a0<\/p>\n\n\n\n

The central bank concluded the country\u2019s first-ever climate risk stress test of systemically important South African banks. <\/p>\n\n\n\n

It found that Absa, Capitec, FirstRand, Investec, Nedbank and Standard Bank are reasonably well positioned to assess the dangers. <\/p>\n\n\n\n

\u201cSome challenges remain, specifically around data gaps and modeling capabilities,\u201d it said.<\/p>\n\n\n\n

According to the report, participant banks categorized 32% of their total credit exposure as climate sensitive by the end of 2023.<\/p>\n\n\n\n

The risk of South Africa remaining on the Financial Action Task Force\u2019s dirty-money list has reduced significantly since November.<\/p>\n\n\n\n

South Africa\u2019s credit-to-GDP gap has been negative since the fourth quarter of 2020, implying that loan extension hasn\u2019t been excessive over this period and therefore isn\u2019t considered a vulnerability from a financial-stability perspective.<\/p>\n","protected":false},"excerpt":{"rendered":"

The South African Reserve Bank has warned that trade and war shocks are a major threat to local banks.<\/p>\n","protected":false},"author":59,"featured_media":826027,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11121],"tags":[29,1798,4088,1498,1799,2924,499],"class_list":["post-828852","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance","tag-absa","tag-capitec","tag-firstrand","tag-investec","tag-nedbank","tag-reserve-bank","tag-standard-bank"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/828852","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/59"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=828852"}],"version-history":[{"count":1,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/828852\/revisions"}],"predecessor-version":[{"id":828859,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/828852\/revisions\/828859"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/826027"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=828852"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=828852"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=828852"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}